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Monday, 9 March 2009
Bellwether Wenzhou reports signs of recovery
The city of Wenzhou in eastern China, an export-oriented manufacturing mecca, is experiencing an economic recovery thanks to Beijing’s stimulus measures and the capacity of privately owned local firms to address challenges.
The city of Wenzhou in eastern China, an export-oriented manufacturing mecca, is experiencing an economic recovery thanks to Beijing’s stimulus measures and the capacity of privately owned local firms to address challenges.
Renowned for its free-wheeling entrepreneurs, Wenzhou is a barometer of the mainland’s industrial economy. Businessmen from the city, in Zhejiang province south of Shanghai, have invested in property across the country and set up shop around the world.
Shao Zhanwei, the city’s Communist Party secretary, said Wenzhou was targeting 9 per cent growth this year, up from 8.5 per cent last year, which was below the national rate of 9 per cent.
“I’m sure that things will turn better in March as compared with the first two months, and in the second quarter as compared with the first quarter,” Mr. Shao said on the sidelines of the National People’s Congress. “The economy will keep accelerating quarter by quarter.”
A recent survey of 7,300 big local firms showed that about 74 per cent had been running at full capacity since the Lunar New Year holidays ended a month ago, while electricity consumption had gradually picked up and was almost back to pre-slowdown levels by the end of last month, Mr. Shao said.
“On the one hand, the global financial crisis has yet to bottom out,” he said. “On the other hand, companies are better able to expand into new markets and look for alternative ways to address the crisis.”
Mr. Shao said Beijing’s 4 trillion yuan (HK$4.54 trillion) stimulus package and accompanying measures to boost 10 key industries would benefit local firms such as Chint Group.
Nan Cunhui, chairman of Chint, which makes power-distribution and communications equipment, said orders last month were up by two-thirds from a year earlier and by 92 per cent from January.
The timing of the Lunar New Year holiday, which fell in February last year and January this year, is a cause of volatility in orders and output.
But Mr. Nan said of the jump in new business: “This shows we are feeling the impact of the country’s infrastructure investment.”
Chint plans to invest 2 billion yuan this year to upgrade its factories producing high- and low-voltage electrical gear. It will also plough 5 billion yuan into a solar energy project launched last year in Hangzhou, the provincial capital, he said.
Mr. Shao said the main concern of Wenzhou right now was the outlook for exports; shipments of leather shoes to Russia were falling, and barriers were going up overseas against Chinese-made goods, he said. Net exports account for almost 40 per cent of Wenzhou’s economic growth.
Another recent survey, this time of 873 local firms, showed almost one-third were experiencing falling orders, particularly from overseas; a further 9.3 per cent of respondents said they were getting next to no new business at all.
But compared with other parts of the mainland, Mr. Shao said, companies in Wenzhou would be the first to emerge from the global crisis.
The city’s exports fell 1.4 per cent in January from a year earlier, compared with a nationwide drop of 17.5 per cent, and shipments to the United States and Europe actually rose because of their low prices, he said.
Wenzhou’s private businesses typically fund themselves through informal financing channels, not through bank loans.
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Bellwether Wenzhou reports signs of recovery
Reuters in Beijing
9 March 2009
The city of Wenzhou in eastern China, an export-oriented manufacturing mecca, is experiencing an economic recovery thanks to Beijing’s stimulus measures and the capacity of privately owned local firms to address challenges.
Renowned for its free-wheeling entrepreneurs, Wenzhou is a barometer of the mainland’s industrial economy. Businessmen from the city, in Zhejiang province south of Shanghai, have invested in property across the country and set up shop around the world.
Shao Zhanwei, the city’s Communist Party secretary, said Wenzhou was targeting 9 per cent growth this year, up from 8.5 per cent last year, which was below the national rate of 9 per cent.
“I’m sure that things will turn better in March as compared with the first two months, and in the second quarter as compared with the first quarter,” Mr. Shao said on the sidelines of the National People’s Congress. “The economy will keep accelerating quarter by quarter.”
A recent survey of 7,300 big local firms showed that about 74 per cent had been running at full capacity since the Lunar New Year holidays ended a month ago, while electricity consumption had gradually picked up and was almost back to pre-slowdown levels by the end of last month, Mr. Shao said.
“On the one hand, the global financial crisis has yet to bottom out,” he said. “On the other hand, companies are better able to expand into new markets and look for alternative ways to address the crisis.”
Mr. Shao said Beijing’s 4 trillion yuan (HK$4.54 trillion) stimulus package and accompanying measures to boost 10 key industries would benefit local firms such as Chint Group.
Nan Cunhui, chairman of Chint, which makes power-distribution and communications equipment, said orders last month were up by two-thirds from a year earlier and by 92 per cent from January.
The timing of the Lunar New Year holiday, which fell in February last year and January this year, is a cause of volatility in orders and output.
But Mr. Nan said of the jump in new business: “This shows we are feeling the impact of the country’s infrastructure investment.”
Chint plans to invest 2 billion yuan this year to upgrade its factories producing high- and low-voltage electrical gear. It will also plough 5 billion yuan into a solar energy project launched last year in Hangzhou, the provincial capital, he said.
Mr. Shao said the main concern of Wenzhou right now was the outlook for exports; shipments of leather shoes to Russia were falling, and barriers were going up overseas against Chinese-made goods, he said. Net exports account for almost 40 per cent of Wenzhou’s economic growth.
Another recent survey, this time of 873 local firms, showed almost one-third were experiencing falling orders, particularly from overseas; a further 9.3 per cent of respondents said they were getting next to no new business at all.
But compared with other parts of the mainland, Mr. Shao said, companies in Wenzhou would be the first to emerge from the global crisis.
The city’s exports fell 1.4 per cent in January from a year earlier, compared with a nationwide drop of 17.5 per cent, and shipments to the United States and Europe actually rose because of their low prices, he said.
Wenzhou’s private businesses typically fund themselves through informal financing channels, not through bank loans.
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